In the previous article, we delved into the untapped potential of Blue-Chip Stamps. This installment continues our journey, exploring how Buffett and Munger steered Blue Chip Stamps forward.

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Buffett's Strategic Moves

Buffett's foray into Blue Chip Stamps began in 1968 when the company had already issued $60 million in unredeemed stamp deposits. By 1972, Buffett directed $25 million towards acquiring See's Candies, a company boasting $35 million in annual revenue. The trajectory continued in 1977 with Blue Chip Stamps' $33 million purchase of "The Buffalo News."

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Shifting Ownership Dynamics

As a result of Buffett's strategic choices, by the early 1970s, his portfolio of companies established themselves as the leading shareholders of Blue Chip Stamps. Munger followed as the second-largest shareholder, and while Green held a slightly smaller stake, the trio's combined influence commanded seats on Blue Chip Stamps' board of directors.

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Evolution of the Stamps Business

For years, trading stamps formed the cornerstone of Blue Chip Stamps. In 1970, the company's sales peaked at $124 million. However, the enthusiasm for trading stamps waned, leading to a sales decline to $90 million in 1982, dwindling even further to a mere $200,000 by 1990. The remnants of trading stamps primarily found solace in bowling alleys.

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Munger's Strategic Involvement and Water Resource Investment

With Buffett and Munger becoming board members, they took charge of the investment committee. This pivotal moment coincided with a downturn in the stamp business. Concurrently, they set their sights on Source Capital, a water resource investment company founded by Carl in 1968. Despite its challenges, Munger recognized the potential within Source Capital and orchestrated a revival strategy.

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Triumphs and Setbacks in Acquisition

The pursuit of the acquisition was challenging. In 1971, an attempt to acquire "The Cincinnati Enquirer" fell short. This newspaper boasted a daily circulation of 190,000 and a Sunday edition of 300,000. Legal entanglements and competitive dynamics thwarted Blue Chip Stamps' $29.2 million bid.

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Diversification and Wesco Financial

As time marched on, Blue Chip Stamps expanded across diverse sectors. By 1980, their ventures spanned trading stamps, See's Candies, Wesco Financial, The Buffalo News, and Precision Steel. The acquisition of Wesco Financial encountered a hiccup, inviting a reevaluation of business strategies due to the regulatory landscape.

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Overcoming Adversities and Looking Ahead

Amidst challenges, Munger's strategic acumen shone. In response to Wesco Financial's merger plans, Munger's intervention aimed to protect shareholder interests. Over six weeks, Blue Chip Stamps accumulated 17% of Wesco's shares, fostering stability in the company's trajectory.

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Navigating the Future

This article unveiled how Buffett and Munger harnessed strategic acquisitions to navigate challenges and maintain competitive standing. The forthcoming chapter promises to delve even deeper into Munger's ingenious tactics, offering an inspiring narrative of foresight and determination.

Prepare for the next episode, where we delve into Munger's creative maneuvers to secure regulatory approval for exceeding the 20% share threshold. Stay tuned for another captivating segment in the saga of Blue Chip Stamps.

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